EXHIBIT 10.13
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY
NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER
THAT ACT OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
NOBEL EDUCATION DYNAMICS, INC.
Common Stock Purchase Warrant
Warrant No. 1 June 30, 1998
NOBEL EDUCATION DYNAMICS, INC., a Delaware corporation (the "Company"),
hereby certifies that, for value received, ALLIED CAPITAL CORPORATION (the
"Holder"), or its successors or registered assigns, is entitled, subject to the
terms set forth below, to purchase from the Company at any time or from time to
time on or after June 30, 1998 and before 5:00 p.m., Washington, D.C. time, on
the Expiration Date (as hereinafter defined) up to an aggregate of 531,255 fully
paid and nonassessable shares of the Company's common stock $.001 par value per
share (the "Common Stock"), representing 6.5% of the Company's fully-diluted
Common Stock as of June 30, 1998 ("Ownership Percentage"), at a price per share
equal to the Exercise Price (as hereinafter defined) in effect at the time of
the exercise of this Warrant. The number of shares of Common Stock issuable
upon the exercise of this Warrant and the Exercise Price are subject to
adjustment as provided in this Warrant.
This Warrant is issued pursuant to a certain Investment Agreement (the
"Agreement") dated as of June 30, 1998, by and among the Company and its
subsidiaries and the Holder, a copy of which is on file at the principal office
of the Company. The holder of this Warrant shall be entitled to the benefits of
the Agreement, as provided therein.
As used herein the following terms, unless the context otherwise requires,
have the following respective meanings:
(a) The term "Company" shall include Nobel Education Dynamics, Inc.
and any corporation that shall succeed to or assume the obligations of
Nobel Education Dynamics, Inc. hereunder.
(b) The term "Exercise Price" shall mean, subject to adjustment
pursuant to Section 5 hereof, $8.5625 per share of Common Stock.
(c) The term "Expiration Date" refers to 5:00 p.m., Washington, D.C.
time, on June 30, 2006.
1. Exercise and Conversion of Warrant.
----------------------------------
1.1 Exercise. Subject to Section 1.3 hereof, this Warrant may be
--------
exercised in full or in part at any time or from time to time until the
Expiration Date by the holder either (a) by surrender of this Warrant and the
subscription form annexed hereto (duly executed) by such holder, to the Company
at its principal office, accompanied by payment, in cash, by the surrender of
any promissory note or notes or other instruments evidencing any indebtedness
outstanding from the Company to the holder hereof, by cancellation of Warrants
previously held by the holder hereof or in Common Stock previously owned or
acquired upon exercise of this Warrant or by certified or official bank check
payable to the order of the Company in the amount obtained by multiplying (x)
the number of shares of Common Stock designated by the holder in the
subscription form by (y) the Exercise Price then in effect, or (b) if in
connection with a registered public offering of the Company's securities, the
surrender of this Warrant (with the subscription form annexed hereto duly
executed) at the principal office of the Company together with notice of
arrangements reasonably satisfactory to the Company for payment to the Company
either by check or from the proceeds of the sale of shares to be sold by the
holder in such public offering of an amount equal to the then applicable
Exercise Price per share multiplied by the number of shares of Common Stock then
being purchased. On any partial exercise the Company at its expense will
forthwith issue and deliver to or upon the order of the holder hereof a new
Warrant or Warrants of like tenor, in the name of the holder hereof or as the
holder (upon payment by such holder of any applicable transfer taxes) may
request, providing in the aggregate on the face or faces thereof for the number
of shares of Common Stock for which such Warrant or Warrants may still be
exercised.
1.2 Conversion.
----------
(a) The holder of this Warrant shall have the right to require the
Company to convert this Warrant (the "Conversion Right"), in whole or in part,
at any time prior to the Expiration Date, into shares of Common Stock as
provided for in this Section 1.2. Upon exercise of the Conversion Right, the
Company shall deliver to the holder (without payment by the holder of any
Exercise Price) such number of fully paid and nonassessable shares of Common
Stock as is computed using the following formula:
X = Y (A-B)
-------
A
where X = the number of shares of Common Stock to be issued to the holder
hereof pursuant to this Section 1.2.
Y = the number of shares of Common Stock then issuable upon the exercise
of this Warrant that the holder hereof is surrendering in connection
with the exercise of the Conversion Right.
A = the Fair Market Value of one share of Common Stock, at the time the
Conversion Right is exercised pursuant to this Section 1.2.
-2-
B = the Exercise Price in effect under this Warrant at the time the
Conversion Right is exercised pursuant to this Section 1.2.
(b) The Conversion Right may be exercised by the holder, at any
time, or from time to time, prior to the Expiration Date, on any business day by
delivering a written notice (the "Conversion Notice") to the Company exercising
the Conversion Right and specifying (i) the total number of shares of Common
Stock the holder wishes to acquire pursuant to such conversion and (ii) a place
and a date not less than one nor more than 20 business days from the date of the
Conversion Notice for the closing of such purchase.
(c) Upon any exercise of the Conversion Right under Section
1.2(b) hereof, (i) the holder will surrender the Warrant and (ii) the Company
will deliver to the holder a certificate or certificates for the number of
shares of Common Stock issuable upon such conversion, together with cash, in
lieu of any fraction of a share, as provided in Section 2 below. Upon any
partial exercise of such Conversion Right, the Company at its expense will
forthwith issue and deliver to or upon the order of the holder hereof a new
Warrant or Warrants of like tenor, in the name of the holder hereof or as such
holder (upon payment by such holder of any applicable transfer taxes) may
request, providing in the aggregate on the face or faces thereof for the number
of shares of Common Stock for which such Warrant or Warrants may still be
exercised or converted after giving effect to the exercise of the Conversion
Right.
(d) Fair Market Value of a share of Common Stock as of a
particular date (the "Determination Date") shall mean:
(i) If the Company's Common Stock is traded on an exchange
or is quoted on The Nasdaq National Market, then the average of the
high and low sale price reported for the 30 business days immediately
preceding the Determination Date.
(ii) If the Company's Common Stock is not traded on an
exchange or on The Nasdaq National Market but is traded in the over-
the-counter market, then the average of the means of the closing bid
and asked prices reported for the 30 business days immediately
preceding the Determination Date.
(iii) Except as provided in subsections 1.2(d)(iv) below, if
the Company's Common Stock is not publicly traded, then the Appraised
Fair Market Value, pursuant to Section 1.2(e) below.
(iv) If the Determination Date is the date of a
liquidation, dissolution or winding up of the Company, or any event
deemed to be a liquidation, dissolution or winding up pursuant to the
Company's Certificate of Incorporation, as amended (the "Charter"),
then the amount specified in the Charter upon liquidation, dissolution
or winding up, assuming for purposes of this subsection 1.2 that all
of the shares of Common Stock issuable upon exercise of all of the
Warrants are outstanding at the Determination Date.
-3-
(e) Appraised Fair Market Value. The "Appraised Fair Market
---------------------------
Value" shall be determined by the following method:
(i) If the Company and the holder of the Warrant agree on
the selection of an appraiser, such appraiser shall determine a value,
and such value shall be the Appraised Fair Market Value;
(ii) If the Company and the holder of the Warrant shall not
agree on the selection of an appraiser within 10 days, each of the
Company and the Holder, shall select an appraiser who shall each
determine a value;
(iii) If the values determined by such two appraisers are
the same (or the lower value determined by an appraiser is within one
percent of the value determined by the other), then such value (or the
average of such two values) shall be the Appraised Fair Market Value;
(iv) If the foregoing two appraisals are not the same and
the lower value determined by an appraiser differs by more than one
percent of the value determined by the other, then the appraisers
shall together select a third appraiser to determine a value;
(v) If the determination of the third appraiser is greater
than the largest of the first two appraisals or less than the smallest
of the first two appraisals, then the average of the first two
appraisals shall be the Appraised Fair Market Value; and
(vi) If the determination of the third appraiser is between
the first two appraisals, then the average of the third appraisal and
the closest of the first two appraisals shall be the Appraised Fair
Market Value.
Each party shall pay the fees and costs of the appraiser it selects, and the
fees and costs of the third appraiser, if any, shall be paid equally by Company
and the Holder.
1.3 Trustee for Warrant Holder. In the event that a bank or trust
--------------------------
company shall have been appointed as trustee for the holder of the Warrant
pursuant to subsection 4.2 hereof, such bank or trust company shall have all the
powers and duties of a warrant agent appointed pursuant to Section 15 and shall
accept, in its own name for the account of the Company or such successor person
as may be entitled thereto, all amounts otherwise payable to the Company or such
successor, as the case may be, on exercise or conversion of this Warrant
pursuant to this Section 1. The Company shall give the holder of the Warrant
notice of the appointment of any trustee and any change thereof.
2. Delivery of Stock Certificates. As soon as practicable after the
------------------------------
exercise or conversion of this Warrant, and in any event within 30 days
thereafter, the Company at its
-4-
expense (including the payment by it of any applicable issue or stamp taxes)
will cause to be issued in the name of and delivered to the holder hereof, or as
such holder (upon payment by such holder of any applicable transfer taxes) may
direct, a certificate or certificates for the number of fully paid and
nonassessable shares of Common Stock to which such holder shall be entitled on
such exercise or conversion, in such denominations as may be requested by such
holder, plus, in lieu of any fractional share to which such holder would
otherwise be entitled, cash equal to such fraction multiplied by the then
current market value (as determined in good faith by the Board of Directors) of
one full share, together with any other stock or other securities and property
(including cash, where applicable) to which such holder is entitled upon such
exercise or conversion pursuant to Section 1 or otherwise.
3. Adjustment for Dividends in Other Stock, Property, etc.;
--------------------------------------------------------
Reclassification, etc. In case at any time or from time to time, the holders of
----------------------
Common Stock shall have received, or (on or after the record date fixed for the
determination of shareholders eligible to receive) shall have become entitled to
receive, without payment therefor,
(a) other or additional stock or other securities or property (other
than cash) by way of dividend, or
(b) any cash (excluding cash dividends payable solely out of earnings
or earned surplus of the Company), or
(c) other or additional stock or other securities or property
(including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares or similar corporation rearrangement,
other than additional shares of Common Stock issued as a stock dividend or in a
stock-split (adjustments in respect of which are provided for in Section 5),
then and in each such case the holder of this Warrant, on the exercise or
conversion hereof as provided in Section 1, shall be entitled to receive the
amount of stock and other securities and property (including cash in the cases
referred to in subdivisions (b) and (c) of this Section 3) which such holder
would hold on the date of such exercise or conversion if on the date hereof he
had been the holder of record of the number of shares of Common Stock called for
on the face of this Warrant and had thereafter, during the period from the date
hereof to and including the date of such exercise or conversion retained such
shares and all such other or additional stock and other securities and property
(including cash in the cases referred to in subdivisions (b) and (c) of this
Section 3) receivable by him as aforesaid during such period, giving effect to
all adjustments called for during such period by Section 4; provided, however,
that such adjustment shall be made only in the event that the Ownership
Percentage of the holder of this Warrant is reduced by 10 percent or more.
4. Adjustment for Reorganization, Consolidation, Merger, etc.
----------------------------------------------------------
4.1 Reorganization; Merger; Sale of Assets. In case at any time or
--------------------------------------
from time to time, the Company shall (a) effect a reorganization, (b)
consolidate with or merge into any other person, or (c) transfer all or
substantially all of its properties or assets to any other person
-5-
under any plan or arrangement contemplating the dissolution of the Company, then
in each such case, the holder of this Warrant, on the exercise or conversion
hereof as provided in Section 1 at any time after the consummation of such
reorganization, consolidation or merger or the effective date of such
dissolution, as the case may be, shall receive, in lieu of the Common Stock
issuable on such exercise or conversion prior to such consummation or such
effective date, the stock and other securities and property (including cash) to
which such holder would have been entitled upon such consummation or in
connection with such dissolution, as the case may be, if such holder had so
exercised or converted this Warrant, immediately prior thereto, all subject to
further adjustment thereafter as provided in Sections 3 and 5.
4.2 Dissolution. In the event of any dissolution of the Company
-----------
following the transfer of all or substantially all of its properties or assets,
the Company, prior to such dissolution, shall at its expense deliver or cause to
be delivered the stock and other securities and property (including cash, where
applicable) receivable by the holder of this Warrant after the effective date of
such dissolution pursuant to this Section 4 to the holder or a bank or trust
company having its principal office in Washington, D.C., as trustee for the
holder or holders of the Warrants.
4.3 Continuation of Terms. Upon any reorganization, consolidation,
---------------------
merger or transfer followed by dissolution referred to in this Section 4 (where,
in the case of a transfer followed by a dissolution, the transferee is paying
for the Company's assets all or in part with its equity securities), this
Warrant shall continue in full force and effect and the terms hereof shall be
applicable to the shares of stock and other securities and property receivable
on the exercise or conversion of this Warrant after the consummation of such
reorganization, consolidation or merger or the effective date of dissolution
following any such transfer, as the case may be. The Company shall be
obligated, prior to and as a condition of such transaction, to enter into an
agreement for the benefit of the Warrant holders that is binding upon the issuer
of any such stock or other securities, including, in the case of any such
transfer, the person acquiring all or substantially all of the properties or
assets of the Company, pursuant to which such person shall expressly assume the
terms of this Warrant as provided in Section 6.
5. Other Adjustments.
-----------------
5.1 Adjustment for Extraordinary Events. In the event that the
-----------------------------------
Company shall (i) issue additional shares of the Common Stock as a dividend or
other distribution on outstanding Common Stock, (ii) subdivide or reclassify
outstanding shares of Common Stock, or (iii) combine outstanding shares of
Common Stock into a smaller number of shares of Common Stock, then, in each such
event, the Exercise Price shall, simultaneously with the happening of such event
be adjusted by multiplying the then Exercise Price by a fraction, the numerator
of which shall be the number of shares of Common Stock outstanding immediately
prior to such event and the denominator of which shall be the number of shares
of Common Stock outstanding immediately after such event, and the product so
obtained shall thereafter be the Exercise Price then in effect. The Exercise
Price, as so adjusted, shall be readjusted in the same manner upon the happening
of any successive event or events described herein in this Section 5. The
Holder of this Warrant shall thereafter, on the exercise hereof as provided in
Section 1, be entitled to
-6-
receive that number of shares of Common Stock determined by multiplying the
number of shares of Common Stock issuable upon the exercise of this Warrant
immediately prior to such issuance by a fraction of which (i) the numerator is
the Exercise Price in effect immediately prior to the issuance resulting in an
adjustment to the Exercise Price and (ii) the denominator is the Exercise Price
in effect after giving effect to any adjustment resulting from such issuance.
5.2 Adjustment for Issuances Below Exercise Price. If the Company
---------------------------------------------
shall at any time or from time to time after June 30, 1998 issue or sell any
shares of Common Stock (other than (i) shares issued in transactions to which
Section 5.1 of this Warrant applies, (ii) up to 1,091,750 shares of Common Stock
(appropriately adjusted for subdivisions, combinations, stock dividends and the
like) issued as compensation or pursuant to the exercise of options granted as
compensation to employees, officers, directors or consultants of the Company in
connection with their service to the Company, (iii) shares of Common Stock
issuable upon conversion of the Series A Convertible Preferred Stock, Series C
Convertible Preferred Stock, or Series D Convertible Preferred Stock, and (iv)
shares of Common Stock issuable pursuant to subscriptions, warrants, options,
convertible securities, or other rights outstanding as of June 30, 1998 and not
included in clauses (i), (ii) or (iii) above) for a consideration per share less
than the Exercise Price in effect for this Warrant immediately prior to the time
of such issue or sale, then forthwith upon such issue or sale the Exercise Price
shall (until another such issue or sale) be reduced to a price (calculated to
the nearest cent) determined by dividing (i) an amount equal to the sum of (X)
the number of shares of Common Stock outstanding immediately prior to such issue
or sale, multiplied by the Exercise Price in effect immediately prior to such
event plus (Y) the consideration, if any, received by the Company upon such
issue or sale, by (ii) the total number of shares of Common Stock outstanding
immediately after such issue or sale. Further, the number of shares purchasable
thereunder shall be increased to a number determined by dividing (i) the number
of shares purchasable hereunder immediately prior to such issue or sale,
multiplied by a fraction of which (x) the numerator is the Exercise Price
hereunder immediately prior to such event, and (y) the denominator is the
Exercise Price in effect immediately after the foregoing adjustment.
For the purposes of this Section 5.2, the following provisions shall
also be applicable:
A. In case the Company shall in any manner offer any rights to
subscribe for or to purchase shares of Common Stock, or grant any options for
the purchase of shares of Common Stock, at a price less than the Exercise Price
in effect immediately prior to the time of the offering of such rights or the
granting of such options, as the case may be, all shares of Common Stock which
the holders of such rights or options shall be entitled to subscribe for or
purchase pursuant to such rights or options shall be deemed to be issued or sold
as of the date of the offering of such rights or the granting of such options,
as the case may be, and the minimum aggregate consideration named in such rights
or options for the Common Stock covered thereby, plus the consideration received
by the Company for such rights or options, shall be deemed to be the
consideration actually received by the Company (as of the date of the offering
of such rights or the granting of such options, as the case may be) for the
issue or sale of such shares.
-7-
B. In case the Company shall in any manner issue or sell any shares
of any class or obligations directly or indirectly convertible into or
exchangeable for shares of Common Stock and the price per share for which Common
Stock is deliverable upon such conversion or exchange (determined by dividing
(i) the total minimum amount received or receivable by the Company in
consideration of the issue or sale of such convertible or exchangeable shares or
obligations, plus the total minimum amount of premiums, if any, payable to the
Company upon conversion or exchange, by (ii) the total number of shares of
Common Stock necessary to effect the conversion or exchange of all such
convertible or exchangeable shares of obligations) shall be less than the
Exercise Price in effect immediately prior to the time of such issue or sale,
then such issue or sale shall be deemed to be an issue or sale (as of the date
of issue or sale of such convertible or exchangeable shares or obligations) of
the total maximum number of shares of Common Stock necessary to effect the
conversion or exchange of all such convertible or exchangeable shares or
obligations, and the total minimum amount received or receivable by the Company
in consideration of the issue or sale of such convertible or exchangeable shares
or obligations, plus the total minimum amount of premiums, if any, payable to
the Company upon exchange or conversion, shall be deemed to be the consideration
actually received (as of the date of the issue or sale of such convertible or
obligations) for the issue or sale of Common Stock.
C. In determining the amount of consideration received by the
Company for Common Stock, securities convertible thereinto or exchangeable
therefor, or rights or options for the purchase thereof, expenses or
underwriting discounts or commissions paid by the Company shall be excluded.
The Board shall determine in good faith the fair value of the amount of
consideration other than money received by the Company upon the issue by it of
any of its securities. The Board shall also determine in good faith the fair
value of any dividend or other distribution made upon Common Stock payable in
property, securities of the Company other than Common Stock or securities of a
corporation other than the Company. The Board shall, in case any Common Stock,
securities convertible thereinto or exchangeable therefor, or rights or options
for the purchase thereof are issued with other stock, securities or assets of
the Company, determine in good faith what part of the consideration received
therefor is applicable to the issue of the Common Stock, securities convertible
thereinto or exchangeable therefor, or rights or options for the purchase
thereof.
D. If there shall be any change in (i) the minimum aggregate
consideration named in the rights or options referred to in Subsection A above,
(ii) the consideration received by the Company for such rights or option, (iii)
the price per share for which Common Stock is deliverable upon the conversion or
exchange of the convertible or exchangeable shares or obligations referred to in
Subsection B above, (iv) the number of shares which may be subscribed for or
purchased pursuant to the rights or options referred to in Subsection A above,
or (v) the rate at which the convertible or exchangeable shares or obligations
referred to in Subsection B above are convertible into or exchangeable for
Common Stock, then the Exercise Price in effect at the time of such event shall
be readjusted to the Exercise Price which would have been in effect at such time
had such rights, options, or convertible or exchangeable shares or obligations
still outstanding provided for such changed consideration, price per share,
number of shares, or rate of conversion or exchange, as the case may be, at the
time initially offered, granted, issued or sold.
-8-
E. Upon the expiration of the right to convert or exchange any
convertible securities, or upon the expiration of any rights, options or
warrants, without conversion, exchange or exercise, the issuance of which
convertible securities, rights, options or warrants effected an adjustment in
the Exercise Price, the Exercise Price shall forthwith be readjusted and
thereafter be the price which it would have been (but reflecting any other
adjustments in the Exercise Price made pursuant to the terms hereof after the
issuance of such convertible securities, rights, options or warrants) had the
adjustment of the Exercise Price made upon the issuance or sale of such
convertible securities or issuance of rights, options or warrants been made on
the basis of the issuance only of the number of additional shares of Common
Stock actually issued upon conversion or exchange of such convertible
securities, or upon the exercise of such rights, options or warrants, and
thereupon only the number of additional shares of Common Stock actually so
issued, if any, shall be deemed to have been issued and only the consideration
actually received by the Company (computed as set forth herein) shall be deemed
to have been received by the Company.
5.3 Adjustment for Price Decline. If the trailing 30 day average
----------------------------
high and low price for Common Stock on the 31st day of May 2000 ("May 31, 2000
Price") is lower than the Exercise Price, the Exercise Price shall be adjusted
to equal the May 31, 2000 Price.
5.4 Adjustment Threshold. No adjustment of the Exercise Price shall
--------------------
be made under Sections 5.1, 5.2 or 5.3 unless the aggregate actions thereunder
reduce in the aggregate the Ownership Percentage of the holder of this Warrant
by 10 percent or more.
6. No Impairment. The Company will not, by amendment of its charter or
-------------
through any reorganization, transfer of assets, consolidation, merger,
dissolution, or any other similar voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the holder of the Warrant against impairment due to such event.
Without limiting the generality of the foregoing, the Company (a) will not
increase the par value of any shares of stock receivable on the exercise or
conversion of the Warrant above the amount payable therefor on such exercise or
conversion, (b) will take all action that may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of stock, free from all taxes, liens and charges with
respect to the issue thereof, on the exercise or conversion of all or any
portion of this Warrant from time to time outstanding, and (c) will not
consolidate with or merge into any other person or permit any such person to
consolidate with or merge into the Company (if the Company is not the surviving
person) or transfer all or substantially all the assets of the Company to
another person, unless such other person shall expressly assume in writing and
will be bound by all the terms of this Warrant, including the provisions of
Section 4.
7. Certificate as to Adjustments. In each case of any adjustment or
-----------------------------
readjustment in the number or type of shares or securities issuable on the
exercise or conversion of this Warrant, an officer of the Company will promptly
compute such adjustment or readjustment in accordance with the terms of this
Warrant and prepare a certificate setting forth such adjustment or
-9-
readjustment, the Exercise Price resulting therefrom and the increase or
decrease, if any, or the number of shares purchasable at such price upon
exercise or conversion of the Warrant, and showing in detail the facts and
computation upon which such adjustment or readjustment is based. The Company
will forthwith mail a copy of each such certificate to each registered holder of
this Warrant, and will, on the written request at any time of the holder of this
Warrant, furnish to such holder a like certificate setting forth the Exercise
Price at the time in effect and showing how such Exercise Price was calculated.
8. Notices of Record Date, Etc. In the event of
---------------------------
(a) any taking by the Company of a record of the holders of any class
of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend on, or any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any other right, or
(b) any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any transfer of all or
substantially all the assets of the Company to or consolidation or merger of the
Company with or into any other person, or
(c) any voluntary or involuntary dissolution, liquidation or winding-
up of the Company,
then and in each such event the Company will mail or cause to be mailed to the
registered holder of this Warrant a notice specifying (i) the date on which any
such record is to be taken for the purpose of such dividend, distribution or
right, and stating the amount and character of such dividend, distribution or
right, (ii) the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up is to take place, and the time, if any is to be fixed, as of which
the holders of record of Common Stock shall be entitled to exchange their shares
of Common Stock for securities or other property deliverable on such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up, and (iii) the amount and
character of any stock or other securities, or rights or option with respect
thereto, proposed to be issued or granted, the date of such proposed issue or
grant and the persons or class of persons to whom such proposed issue or grant
is to be offered or made. Such notice shall also state that the action in
question or the record date is subject to the effectiveness of a registration
statement under the Securities Act of 1933, as amended (the "Securities Act"),
or a favorable vote of stockholders if either is required. Such notice shall be
mailed at least 20 days prior to the date specified in such notice on which any
such action is to be taken or the record date, whichever is earlier.
9. Reservation of Stock, etc., Issuable on Exercise of Warrants. The
------------------------------------------------------------
Company will at all times reserve and keep available, solely for issuance and
delivery on the exercise or conversion of the Warrant, all shares of Common
Stock from time to time issuable on the exercise or conversion of this Warrant.
-10-
10. Registration. If the issuance of any shares of Common Stock required
------------
to be reserved for purposes of exercise or conversion of this Warrant or for the
conversion of such shares requires registration with, or approval of, any
Federal governmental authority under any Federal or state law (other than any
registration under the Securities Act) or listing on any national securities
exchange, before such shares may be issued upon exercise or conversion of this
Warrant or such conversion, the Company will, at its expense, use its best
efforts to cause such shares to be duly registered or approved, or listed on the
relevant national securities exchange, as the case may be, at such time, so that
such shares may be issued in accordance with the terms hereof and so converted.
11. Transfer of Warrant. The transfer of this Warrant and all rights
-------------------
hereunder, in whole or in part, is registrable at the office or agency of the
authorized attorney, upon surrender of this Warrant properly endorsed. Each
taker and holder of this Warrant, by taking or holding the same, consents and
agrees that this Warrant, when endorsed in blank, shall be deemed negotiable,
and that the holder hereof, when this Warrant shall have been so endorsed, may
be treated by the Company and all other persons dealing with this Warrant as the
absolute owner and holder hereof for any purpose and as the person entitled to
exercise the rights represented by this Warrant, or to the registration of
transfer hereof on the books of the Company; and until due presentment for
registration of transfer on such books the Company may treat the registered
holder hereof as the owner and holder for all purposes, and the Company shall
not be affected by notice to the contrary.
12. Register of Warrants. The Company shall maintain, at the principal
--------------------
office of the Company (or such other office as it may designate by notice to the
holder hereof), a register in which the Company shall record the name and
address of the person in whose name this Warrant has been issued, as well as the
name and address of each transferee and each prior owner of such Warrant. The
ownership of the Warrant shall be proved by reference to the register and, prior
to due presentation for registration of transfer, the Company may treat the
person in whose name the Warrant shall be registered as the absolute owner
thereof for all purposes.
13. Exchange of Warrant. Subject to Section 20, this Warrant is
-------------------
exchangeable, upon the surrender hereof by the holder hereof at the office or
agency of the Company referred to in Section 12, for one or more new Warrants of
like tenor representing in the aggregate the right to subscribe for and purchase
the number of shares of Common Stock which may be subscribed for and purchased
hereunder, each of such new Warrants to represent the right to subscribe for and
purchase such number of shares as shall be designated by said holder hereof at
the time of such surrender.
14. Replacement of Warrant. On receipt of evidence reasonably
----------------------
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of such Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant of like tenor;
provided, however, if this Warrant of which the original holder of this Warrant,
-------- -------
its nominee, or any of its officers or
-11-
directors is the registered holder is lost, stolen or destroyed, the affidavit
of the President, Vice President, Treasurer, or any General Partner of the
registered holder setting forth the circumstances with respect to such loss,
theft or destruction shall be accepted as satisfactory evidence thereof, and no
indemnity bond or other security shall be required as a condition to the
execution and delivery by the Company of a new Warrant in replacement of such
lost, stolen or destroyed Warrant other than the registered holder's written
agreement to indemnify the Company.
15. Warrant Agent. The Company may, by written notice to the registered
-------------
holder of this Warrant, appoint an agent for the purpose of issuing Common Stock
on the exercise or conversion of the Warrant pursuant to Section 1, exchanging
this Warrant pursuant to Section 13, and replacing this Warrant pursuant to
Section 14, or any of the foregoing, and thereafter any such issuance, exchange
or replacement, as the case may be, shall be made at such office by such agent.
16. Remedies. The Company stipulates that the remedies at law of the
--------
holder of this Warrant in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
17. Closing of Books. The Company will at no time close its transfer
----------------
books against the transfer of any Warrant or of any shares of Common Stock
issued or issuable upon the exercise or conversion of any Warrant in any manner
which interferes with the timely exercise or conversion of this Warrant.
18. No Rights or Liabilities as a Stockholder. This Warrant shall not
-----------------------------------------
entitle the holder hereof to any voting rights or other rights as a stockholder
of the Company. No provision of this Warrant, in the absence of affirmative
action by the holder hereof to purchase Common Stock, and no mere enumeration
herein of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Exercise Price or as a stockholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
19. Notice, etc. All notices and other communications from the Company to
-----------
the registered holder of this Warrant shall be mailed by first class registered
or certified mail, postage prepaid, at such address as shall have been furnished
to the Company in writing by such holder.
20. Investment Representations. The holder hereof (and each subsequent
--------------------------
holder) represents to the Company that this Warrant is being acquired for the
holder's own account and for the purpose of investment and not with a view to,
or for sale in connection with, the distribution thereof, nor with any present
intention of distributing or selling the Warrant or the Common Stock issuable
upon exercise or conversion of the Warrant. The holder hereof acknowledges and
agrees that the Warrant and the Common Stock issuable upon exercise or
-12-
conversion of the Warrant (if any) have not been (and at the time of acquisition
by such holder, will not have been or will not be) registered under the
Securities Act or under the securities laws of any state, in reliance upon
certain exemptive provisions of such statutes. The holder hereof recognizes and
acknowledges that because the Warrant and the Common Stock issuable upon
exercise or conversion of the Warrant (if any) are unregistered, they are not
presently eligible for resale, and may only be resold in the future pursuant to
an effective registration statement under the Securities Act and any applicable
state securities laws, or pursuant to a valid exemption from such registration
requirements. Each subsequent holder hereof shall be required to make all of
the representations which are required by this Section 20 to be made by the
initial holder hereof, including without limitation the representations which
are contained in the Agreement. The Company shall not be required to register
the transfer of the Warrant or any Common Stock into which the Warrant may be
converted on the books of the Company unless the Company shall have been
provided at the transferor's expense with an opinion of counsel reasonably
satisfactory to the Company prior to such transfer to the effect that
registration under the Securities Act of 1933, as amended, or any applicable
state securities laws is not required in connection with the transaction
resulting in such transfer. The Warrant shall bear the restrictive legend set
forth at the beginning of this Warrant, and any share certificate issued upon
conversion shall bear a comparable legend, except that such restrictive legend
shall not be required if the opinion of counsel reasonably satisfactory to the
Company referred to above is to the further effect that such legend is not
required in order to establish compliance with the provisions of the Securities
Act of 1933, as amended, and any applicable state securities laws, or if the
transfer is made in accordance with the provisions of Rule 144 under such act.
21. Binding Effect on Successors. This Warrant shall be binding upon any
----------------------------
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets (to the extent provided in
Section 4), and all of the obligations of the Company relating to the Common
Stock issuable upon the exercise or conversion of this Warrant shall survive the
exercise, conversion, and termination of this Warrant and all of the covenants
and agreements of the Company shall inure to the benefit of the successors and
assigns of the holder hereof. The Company will, at the time of the exercise or
conversion of this Warrant, in whole or in part, upon request of the holder
hereof but at the Company's expense, acknowledge in writing its continuing
obligation to the holder hereof in respect of any rights (including, without
limitation, any right to registration of the shares of Registrable Securities)
to which the holder hereof shall continue to be entitled after such exercise or
conversion in accordance with this Warrant; provided, that the failure of the
--------
holder hereof to make any such request shall not affect the continuing
obligation of the company to the holder hereof in respect of such rights.
22. Miscellaneous. This Warrant and any term hereof may be changed,
-------------
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought, subject to the provisions of the Agreement. This Warrant shall be
construed and enforced in accordance with and governed by the internal laws of
the State of Delaware. The headings in this Warrant are for purposes of
reference only, and shall not limit or otherwise affect any of the terms hereof.
This
-13-
Warrant is being executed as an instrument under seal. The invalidity or
unenforceability of any provision hereof shall in no way affect the validity or
enforceability of any other provision.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-14-
IN WITNESS WHEREOF the Company has executed this Warrant on the date set
forth below.
Dated: June 30, 1998
NOBEL EDUCATION DYNAMICS, INC.
By: _______________________________
Title:______________________________
[Corporate Seal]
Attest:
___________________________
Secretary
-15-
FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
TO: NOBEL EDUCATION DYNAMICS, INC.
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise this Warrant for, and to purchase thereunder,
________________________ shares of _________________________ of NOBEL EDUCATION
DYNAMICS, INC. and herewith makes payment of $__________________________
therefor in cash, and requests that the certificates for such shares be issued
in the name of, and delivered to _________________________________________
whose address is _____________________________________________________________.
Dated: ___________________________________
(Signature must conform to name of
holder as specified on the face of the
Warrant)
____________________________________
____________________________________
(Address)
-16-
FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns, and transfers
unto ______________________________________ the right represented by the within
NOBEL EDUCATION DYNAMICS, INC. to which the within Warrant relates, and appoints
_____________________________ Attorney to transfer such right on the books of
NOBEL EDUCATION DYNAMICS, INC. with full power of substitution in the premises.
Dated: ____________________________________
(Signature must conform to name of holder
as specified on the face of the Warrant)
____________________________________
____________________________________
(Address)
Signed in the presence of:
________________________________________
-17-
